Tea in Portugal

PROSPECTS

Health and wellness at the core of the tea prospects

Lipton, Yogi Tea and others are investing in innovation and marketing, to promote the category’s characteristics, although consumers are still not adhering massively to the category. The industry focus is on green tea, simple or with added ingredients, be it fruit flavours or functional ingredients (vitamins, energetic and for detox, for example) and on other tea, particularly white tea, oolong, rooibos and Matcha.

Tea and RTD tea evolving side by side

2017 and 2018 saw a shift in market dynamics in RTD tea, with the launching of products based on green tea and other teas containing fewer calories and, often, ingredients offering additional benefits and changing the brands’ approach to consumers. Given the popular use of the base product, both categories are expected to evolve in a similar path, possibly with a greater emphasis from tea players to emulate similar marketing strategies, emphasising the functional, health and hydration benefits of tea products.

Growth potential of tea

Tea consumption in Portugal remains at low levels, compared with per capita consumption in other Western European countries; this leaves room for significant growth for the category. Increasing concerns about health and wellness, particularly amongst those consumers willing to avoid caffeine consumption, should contribute to the category’s growth, as a substitute for coffee.

COMPETITIVE LANDSCAPE

Tea pods losing ground

Tea pods continue to founder as alternative products to coffee for pod systems. Despite offering comfort and practicality, tea pods have been decreasing in relevance.

Private label: Growing in the present and in the near future

Private label is capitalising in a category where the core business is in traditional basic fruit and herbal teas, with improvements in consumer perception of private label product quality and modern grocers’ strategies to focus on their own brands playing a key role. The entry of the Spanish supermarket chain Mercadona, which has announced plans to open its first 10 outlets in Portugal in 2019, is set to accelerate this trend in the near future, due to the strength of its private label offer.

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